Trailing Risk

As a floor trader in the early 80's, I experienced the jostling arms raised hysteria of market making.  The anxious close proximity to price discovery scribbled down on trading cards while impatiently looking to confirm  trades with other traders nearby or across the pit.  Laughing out load sometimes at the sheer idiocy as bodies colliding in pressing motion to a  collective scream  of "Sold".  

Back then we viewed risk as the thing to minimize so we would not have to put any more money in our margin accounts.  Get the edge, don't be stupid.  Move up in size and use the same rules.  But we all marveled at the shooter.  The big traders who stepped out, no net. Later it became clear many shooters with bid and offer size bravado were hiding quiet trades the rest of the pit never saw.  Bag men.

Of course the pit shooters died with electronic trading, no where to steal an edge.  Now naked out there and looking as stupid as they really were.  No real talent.  

The search for an edge was passed from the early neanderthal shooter to the nerd geek high frequency sneaks listening to the pipeline of bids and offers passing from exchange platforms into computer sniffing algorithms ready to front run all the brokers on Wall Street.   May be the dumbest of all trading species.  But even the brightest of of nerd scholars abandoned great theory about risk and price construct to focus on front running since random price action seemed too hazardous to their genius image.  The blasts of 1997, 2000, and 2008 forever humbled risk harnesses, efficient market theory, and all option theory.  

To be continued.